Close your eyes. Imagine that you are a twenty-five-year-old working in the heart of Islamabad as a Product Manager at a Fintech startup that plans to launch a digital payments solution powered by blockchain technology. It is another day at work in your office, located in a co-working space next to the Innovation Lab of one of the world’s biggest digital payments solutions companies.
Even though your startup has not yet raised the next funding round, the office space is subsidized because the President of the Lab sees potential in your product and the entrepreneurial grit that your team brings in the vicinity. After a long day at work, you are famished and cycle to a restaurant nearby, where you spot one of the leading tech lawyers in the country.
As the seat next to them is vacant, you politely introduce yourself and exchange ideas about what you are working on. In the next hour, you brainstormed regulatory challenges that you were not even aware of, given that you have no legal expertise in your startup.
This is just a tiny glimpse of what it means to be a part of a Knowledge Ecosystem. You are a ‘knowledge worker’ in the flagship Special Technology Zone – Islamabad Technopolis. Your work has the potential to alter the trajectory of the entire nation (and perhaps the region). Before any further discussion on the vision, it is essential to look back and learn from history.
While there have been various missed windows, the pathway ahead is now clear to harness the potential of a young nation brimming with opportunities. Pakistan’s economy in the 1960s was doing much better than countries like South Korea, Malaysia, Indonesia, and even China. Our exports were USD 160 million in 1960 against South Korean exports of only USD 32 million.
Now, we are stuck with USD 20-25 billion against South Korea’s exceeding USD 500 billion. What went wrong? Which windows of opportunity did Pakistan miss out on that other regional emerging markets were able to grasp? One of the most imperative was the transition to the knowledge economy focused on technology, innovation, and entrepreneurship.
Knowledge is key to success in changing world
As technological changes took the world by storm, the demand for skilled knowledge workers also grew in countries worldwide. Knowledge, which included the generation of new ideas and the accumulation of intellectual capital, became the key ingredient for success in a rapidly-changing world. The technology sector soon became the core pillar of the knowledge economy.
However, one of the reasons Pakistan could not make this transition a few decades ago is that Pakistani leaders, government functionaries, and entrepreneurs had previously lacked the will and the know-how to comprehend the imperatives of the knowledge economy.
Pakistan’s time is now. We might be late, but that gives us a window of opportunity to follow a tried & tested model, adapt it to the context of Pakistan, and, finally, leapfrog to a new era of innovation. What is this tried & successful model? Moreover, how have we contextualized it to Pakistan through the new Special Technology Zones Authority (STZA)?
Science Parks are the Innovation clusters
Since knowledge, innovation, and technology entrepreneurship are the essential forces in a knowledge economy, the foundation is set through an ecosystem where the interplay between the respective forces can take place for the country’s economic development. One of the ways that countries, from the United States to China, have formed knowledge ecosystems is through identifying a geographical parcel with special laws.
Herein, the respective players can take advantage of the tax incentives, establish strong linkages, and partake in knowledge-intensive activities for the shared goals of technology entrepreneurship and innovation that, ultimately, contribute to the region’s socio-economic development. The clusters of innovation also referred to as STZs or Science Parks, comprise tech companies, startups, R&D facilities, universities, incubators, and other facilities in the respective land parcel.
They provide incentives that attract the best ideas and talents and further nurture them through an ecosystem approach where knowledge workers like scientists, lawyers, architects, researchers, academics, tech entrepreneurs, and technologists come together to build their intellectual capital further.
How Shenzhen SEZ changed China?
One of the essential high-tech clusters quoted globally for its success is Shenzhen in China. The Shenzhen Special Economic Zone (SEZ) was the first such zone created during the early period of modern China’s economic reforms. On August 6, 1980, the Standing Committee of the National People’s Congress authorized an area of 327.5 square kilometers to be designated as an experimental economic zone.
The consequent promulgation of the Economic Zone Ordinance in Guangdong Province marked the formal founding of the Shenzhen SEZ. Ever since the nation’s opening up, it has been serving as China’s “window to the world” and “an experimentation field.” A series of significant reforms were introduced, such as the selling out of state-land use rights, the stock exchange pilot, the personnel system reform, and the minimizing of administrative approval procedures.
In 2007, Shenzhen was ranked first in comprehensive municipal competitiveness among all the cities in mainland China. Over the last two decades, the Shenzhen SEZ concentrated on high tech exports and ICT and building world-class companies like Huawei, Tencent, ZTE, and BYD. Today, Shenzhen boasts of being the world’s tech capital and GDP of approximately $400 Billion.
Moreover, China’s Zhongguancun (Z-Park) has emerged as a supercluster of Asia’s leading entrepreneurs. Alongside this, South Korea’s Daedeok Innopolis and Singapore’s Sichuan Hi-Tech Innovation Park have played a crucial part in the rise of their respective countries’ economic and technological prosperity in competition with the rest of the world.
From producing successful startups to hosting manufacturing and R&D plants for some of the world’s largest tech companies, such clusters have been the driving force of innovation in the past few decades. Innovation Clusters, particularly in China’s Zhongguancun, also host major S&T universities and R&D facilities that offer a direct linkage to commercialize the knowledge-based output.
Zhongguancun Park in Beijing has access to China’s leading universities, including Peking and Tsinghua universities. They ensure a solid academia industry linkage and offer opportunities for university students to inculcate an entrepreneurial spirit. The incubators/ accelerators located within universities also push young entrepreneurial students to learn from startups, SMEs, and corporations within the cluster and push them to become the founders of tomorrow.
Pakistan’s time is now after missing out on tech booms that helped rapidly grow nations like China, India, Malaysia, Singapore, and the Philippines. Its economic prosperity and future growth depend on its ability to focus on the interplay between technological innovation and entrepreneurship. In this century of the ‘ tech entrepreneur,’ we can no longer solely rely on a ‘brick and mortar’ system.
Read more: Pakistan: A sleeping technology giant
Others have been successful, and we have the opportunity now to emulate that success and embrace the pro-innovation notion and bring Pakistan up to par with its regional competitors and create an environment that enables tech-based innovation and creativity. High tech clusters can be the fast-track socio-economic strategy for Pakistan as it has a strong foundation of tech professionals which can grow exponentially.
China’s success: outcome of sophisticated policy design
China’s remarkable economic growth, prosperity, and export industry development directly resulted from sophisticated policy design and spatial economic configuration for her STZs. Pakistan can also replicate this success if correct policies and an appropriate ecosystem for TDKE are effectively put in place without the usual bureaucratic red tape.
For example, the Shenzhen SEZ came at a critical moment in China’s reform and opening up to the outside world. The central government played a leading role in authorizing such SEZs and engaged in the associated decentralization at a later SEZ development stage through robust monitoring, evaluation, and accountability frameworks.
The Guangdong provincial government was also prominent in promoting the demand for an SEZ, taking the initiative in its planning, and facilitating its establishment. Furthermore, finally, the Shenzhen municipal government played a crucial role in implementing the reform and showed great courage in breaking down the traditional institutions.
Hence, STZ is one tried and successful mega initiative used by many countries, including China, Hong Kong, Vietnam, Philippines, Turkey, and Qatar, to transform their economies from low-end technology levels, which focus on producing poor quality and cheap goods, on becoming world-class manufacturers and producers of quality goods and services. Through this transition, the respective highlighted economies have been able to capture global markets, earn substantial foreign exchange, and create valuable foreign exchange reserves to be an effective sovereign state.
One of the most essential and perhaps obvious policy tools, in this respect, was to prioritize legislation for setting up of STZs, which function as innovation clusters, to transform Pakistan’s economy and export base from low technology to a higher and value-added economy so that we can leapfrog and produce goods and services required by the global markets and thereby add the much-needed jobs and alleviate poverty.
Pakistan’s STZA: Building Knowledge Ecosystems
In recognition of the crucial need to harness the opportunities of the fourth industrial revolution, the National Assembly has issued a mandate to establish the Special Technology Zones Authority (STZA), which will provide legislative and institutional support for the development of the national technology sector. Under the Cabinet Division of the Government of Pakistan, this body will work to develop a technology-driven knowledge ecosystem and encourage modern innovative solutions and futuristic entrepreneurship.
Inspired by the success of China’s governance model for the development of SEZs, the STZA will develop Special Technology Zones (STZs) across Pakistan, provide particular incentives to attract investors, builders, and technology companies to partner with the government, and also provide one-window facilitation to local and international companies. The STZs will comprise Information Technology (IT) Parks, Software Technology Parks, Business Process Outsourcing (BPO) Complexes, R&D facilities, and Excellence Centres for tech-driven businesses and startups engaged in providing IT & IT-enabled Services (ITeS).
The Authority will hold itself accountable to the public based on its Key Performance Indicators (KPIs) that are derived from its mandate: 1) Technology Exports, 2) Technology Transfer, 3) Human Capital Development, 4) Job Creation, 5) Import Substitution, 6) Foreign Direct Investment, and 7) Research & Development. It is the first Authority to have the Prime Minister as President of the Board of Governors (BoG), which shows the government’s commitment to make the technology sector its strategic priority and assist STZA to achieve its strategic objectives in the shortest possible time.
STZA aims to build knowledge ecosystems that will harness Pakistan’s technology potential and set the country on the trajectory of a Newly Industrialized Country (NIC) with Pakistanis experiencing higher living standards and improved socio-economic conditions. The flagship STZ – Islamabad Technopolis – will be the first knowledge ecosystem in the country and demonstrate what it means to offer an enabling environment for industry, research, and government to collaborate under the triple helix model of innovation.
Amer Hashmi is the Chairman of the Special Technology Zones Authority (STZA). He was the Advisor and Chief Strategy Officer at the National University of Sciences & Technology (NUST). He was also the Chairman of the Executive Committee of NUST Science & Technology Park, founding President of the Global Think Tank Network (GTTN), and the founding CEO of Si3, Pakistan’s pioneering technology outsourcing firm. A slightly different version of this article appeared in the August issue (print) of Global Village Space Magazine under the title, “Pakistan’s Time is now: Setting up the Special Technology Zones Authority”